The Hualalai Resort is a 625-acre membership community that includes a world class hotel, the renowned Four Seasons Resort Hualālai at Historic Ka‘upulehu, and two golf courses: the Hualālai Golf Course, designed by Jack Nicklaus, and the Ke‘olu Course, designed by Tom Weiskopf.

In addition, the project district is entitled for eventual development of up to 700 residential units, and has been selling single family homesites and luxury low-rise condominium units since 1996.

This graph tracks the number of single family, condominium, and vacant lot sales at Hualalai Resort since the onset of the worldwide financial crisis in late 2008 .

As shown, absorption in the early part of the recovery period 2009-2011 was relatively stable, with a total of 25 to 28 sales per year. 2012 saw a meaningful bump up to 34 sales, and as of October 1, 2013, the 2013 calendar year is on pace for more than 50 sales in the prestigious community–nearly one a week.

Questions or comments? Please leave them in the comment box below, I would be happy to clarify and/or expand.

Hawaii resort brokers have long talked about the potential for Chinese buyers to enter the second home market in a big way. So far, at least on the neighbor islands, we haven’t seen it, but the speculation continues” – CP

Chinese buyers have ‘insatiable appetite’ for Hawaii real estate

Wealthy Chinese buyers have an “insatiable appetite” for Hawaii real estate, and there is a group that is looking to purchase larger projects and is even in discussions with local developers, a Canadian entrepreneur and co-founder of a New York and Shanghai-based company that offers lifestyle and travel opportunities to its private network of high net worth and emerging wealth Chinese members said Wednesday.Derek Muhs, co-founder of Affinity China and the keynote speaker at the “China Ready Real Estate Investment” seminar held at the Ala Moana Hotel, told a group of real estate industry stakeholders and others, about what the Chinese are buying in Hawaii, why they are buying it and how to connect with Chinese consumers.

Chinese real estate investors are expected to spend more than $175 billion during the next few years acquiring residential and commercial properties around the world and Hawaii is on the list of desired investment places, according to Affinity China.

The Chinese are buying single-family homes in high-end areas ranging in price from $500,000 to $1.5 million, and 70 percent of them pay cash, Muhs said.

“They buy it because they can afford it and they are looking for deals, like distressed assets and when the economy slows,” Muhs said. “They come to top locations like New York City, Los Angeles, San Francisco with central locations and good schools, but Hawaii is there in the top 10, sometimes in the top five.”

He also pointed out that Chinese buyers like new, or newer, projects and look for infrastructure, such as shops and other amenities.

The Chinese also like it when businesses adapt to them.

For example, Muhs said, one of his clients bought in San Francisco instead of Hawaii because, besides pointing out that properties are dated, the city by the bay seemed to have more restaurants with menus in Chinese.

Muhs noted that the Chinese are buying in Hawaii because it’s a good investment for them.

“There are many trust issues they have in China, so they want to get some money out and diversify,” he said. “They have a lot of cash and they don’t want it all in the same bucket. It is part of their DNA and culture to own tangible assets, real estate.”

Trust is one of the bigger challenges when trying to connect with Chinese consumers and Muhs said that many people in China struggle with this challenge.

For instance, they’ll often trust a family member or friend, rather than a professional.

“One of my clients bought in Greece because a family member bought there too,” Muhs said. “They expect a relationship to commence. This ‘hit it and quit it, get the deal done’ stuff won’t work.”

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million. There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes. Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 8 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Bedroom Count

Consider the following graph and chart, which categorize Maui million dollar home sales by the number of bedrooms in their floorplans:

Maui Million Dollar Home Sales By Bedroom Count

Maui Million Dollar Single Family Homes By Bedroom Count

Sold From 1/1/2012 through 9/16/2013

Bedrooms

# of Sales

% of Total

1

2

0.9%

2

20

8.7%

3

88

38.1%

4

82

35.5%

5

29

12.6%

6

9

3.9%

7

1

0.4%

Total

231

100.0%

Bottom Line: No Need To Remake Buckingham Palace

The vast majority of million dollar homes sold on Maui have just 3 or 4 bedrooms. Maybe not impressive on MTV Cribs, but obviously enough for hundreds of wealthy second home buyers.

Questions or comments? Please leave them in the comment box below, I would be happy to clarify and/or expand.

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million. There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes. Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 7 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Year Built

Consider the following graph and chart, which categorize Maui million dollar home sales by the year of their construction:

Maui Million Dollar Home Sales By Year Built

Maui Million Dollar Single Family Homes By Year Built

Sold From 1/1/2012 through 9/16/2013

Year Built

# of Sales

% of Total

1920-1929

1

0.4%

1930-1939

4

1.7%

1940-1949

1

0.4%

1950-1959

10

4.3%

1960-1969

3

1.3%

1970-1979

18

7.8%

1980-1989

35

15.2%

1990-1999

40

17.3%

2000-2009

107

46.3%

2010-2019

12

5.2%

Total

231

100.0%

More than 50 percent of the Valley Isle’s million dollar home sales have been built since 2000, with 84 percent constructed since 1980.

Bottom Line: Newer is better, no surprise here.

As wealthy buyer preferences for residential real estate evolve over time, the luxury segment is quick to adapt. For example, solar energy and “great rooms” are in, rear projection television nooks and galley kitchens are out.

Although they are usually built to high construction standards, an appraiser often observes that residences in the high-end/second-home market can have economic lives that are are shorter than less expensive dwellings–sometimes meaningfully so. A future article will identify a case study or two where ultra-high end oceanfront homes in Hawaii were torn down for land value/redevelopment, despite being less than 20 years old!

Questions or comments? Please leave them in the comment box below, I would be happy to clarify and/or expand.

Aloha, Chris

Bonus: Economic Life

economic life

The period over which improvements to real property contribute to property value.

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million. There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes. Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 6 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Land Area

Consider the following graph, which categorizes the Maui million dollar home sales by their lot sizes:

Maui Million Dollar Home Sales By Land Area

If you are unfamiliar with the luxury home market in Hawaii, the data presented on this graph might be counter-intuitive. As shown, most million dollar home sales are on lots that are smaller than half an acre in size, and only a handful of transactions are on tracts larger than ten acres.

Bottom Line: Once Again, Bigger Isn’t Necessarily Better

Not many people would argue that, all things being equal, more land area is usually better. But on Maui and throughout the Hawaii high-end residential sector, an experienced real estate appraiser understands that beach frontage and ocean views are the primary drivers of market value. Since near-ocean properties are typically subdivided into smaller land area configurations, it is easy to see how the most common high-dollar sales have smaller lots.

Questions or comments? Please leave them in the comment box below, I would be happy to clarify and/or expand.

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million. There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes. Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 5 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Price Per Square Foot Of Living Area

Consider the following graph and chart, which measures each of the million dollar sales divided by their respective living areas in square feet:

Maui Million Dollar Sales By Price Per Square Foot

Island of Maui Million Dollar Single Family Homes By Price Per Square Foot Of Living Area

Sold From 1/1/2012 through 9/16/2013

Price Per Square Foot

# of Sales

% of Total

$0-$250

2

0.9%

$250-$500

81

35.1%

$500-$750

77

33.3%

$750-$1000

36

15.6%

$1000-$1250

14

6.1%

$1250-$1500

7

3.0%

$1500-$1750

4

1.7%

$1750-$2000

2

0.9%

$2000-$2250

2

0.9%

$2250-$2500

2

0.9%

$2500-$2750

1

0.4%

$2750-$3000

1

0.4%

$3000-$3250

0

0.0%

$3250-$3500

0

0.0%

$3500-$3750

1

0.4%

$3750-$4000

1

0.4%

Total

231

100.0%

More than 90 percent of Maui’s million dollar home sales in the study period fall in the “price per square foot” range of $250 to $1,250, with the $250 to $1,000 range accounting for 84 percent of the transactions.

Maui real estate agents that are active in the luxury sector report that the high-end/luxury market typically begins at the $1,000 per square foot level. The sub-$1,000 data shows how raw demand for Maui residences generates a great number of high dollar ($1.0 M plus) sales for “less-than-luxury” homes.

The two sales that cleared the $3,000 per square foot level did so for different reasons: one was a prime white sand beach home on South Kihei Road that sold for $23.0 million. The other was an older/smaller cottage on an amazing 1.1 acre oceanfront lot near Paia–the high price per square foot of living area was due to the largely insignificant improvements on a very valuable piece of land.

Bottom Line: At least on Maui, a million bucks doesn’t go as far as it used to.

At these prices, it is easy to see how a Maui real estate appraiser could be regularly confronted with homes that sell for prices that easily exceed Fannie Mae, Freddie Mac, and FHA conforming loan limits.

Questions or comments? Please leave them in the comment box below, I would be happy to clarify and/or expand.

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million. There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes. Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 4 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Agent

Consider the following graph and chart, 24 agents have sold four or more “million dollar homes” in the study period (ties sorted by first name alphabetical order):

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million.

There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes. Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 3 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Living Area

Consider the following graph and chart:

Maui Million Dollar Sales By Living Area

Maui Million Dollar Single Family Homes By Living Area

Sold From 1/1/2012 through 9/16/2013

Living Area in SF

# of Sales

% of Total

0-999

5

2.2%

1000-1999

32

13.9%

2000-2999

68

29.4%

3000-3999

75

32.5%

4000-4999

28

12.1%

5000-5999

17

7.4%

6000-6999

2

0.9%

7000-7999

2

0.9%

8000-8999

1

0.4%

9000-10000

1

0.4%

Total

231

100.0%

Luxury homes having between 2,000 and 4,000 square feet of living area represent the “sweet spot” of the Maui luxury market, comprising more than 60 percent of the Valley Isle’s million dollar home sales since the beginning of 2012.

Bottom Line: Bigger Isn’t Necessarily Better

97.4 percent of all “million dollar plus” single family homes sold on Maui since 2012 have 6,000 square feet of living area or less. While it is certainly possible to build larger residences, and some very wealthy individuals have, if you’re building much larger than 5,000 square feet, you might be going beyond what the market prefers.

Questions or comments? Please leave them in the comment box below, I would be happy to clarify and/or expand.

Aloha, Chris

Bonus – Superadequacy

The data above suggests that building much larger than 5,000 square feet may not be consistent with market preferences. If true, real estate appraisers refer to this phenomena as a “superadequacy”, which is defined below:

superadequacy

An excess in the capacity or quality of a structure or structural component; determined by market standards.

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million.

There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes. Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 2 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Sale Price

Consider the following graph and chart:

Maui Million Dollar Homes By Sale Price

Maui Million Dollar Single Family Homes By Sale Price

Sold From 1/1/2012 through 9/16/2013

Sale Price

# of Sales

% of Total

$1.0 M to $1.9 M

157

68.0%

$2.0 M to $2.9 M

31

13.4%

$3.0 M to $3.9 M

18

7.8%

$4.0 M to $4.9 M

9

3.9%

$5.0 M to $5.9 M

5

2.2%

$6.0 M to $6.9 M

2

0.9%

$7.0 M to $7.9 M

1

0.4%

$8.0 M to $8.9 M

4

1.7%

$9.0 M to $9.9 M

3

1.3%

More than $10.0 M

1

0.4%

Total

231

100.0%

The data shows a predictable trend, with more than 80 percent of the “one million plus” sales on Maui being in the “under $3.0 million” price range. Although a handful of high profile Maui luxury homes have sold in the past few years for prices in excess of $20.0 million, MLS records show only one residence eclipsing $10.0 million since January 1, 2012.

Bottom Line: Price Matters

There is healthy market activity in Maui’s “million dollar plus” category, but the overwhelming majority of sales (nearly 90 percent) sold for less than $4.0 million.

Questions or comments? Please leave them in the comment box below, I would be happy to clarify and/or expand.